Monthly payment calculator
An estimate on the amount borrowed. Arrangement fees, insurance and any early-repayment charge are not included.
The monthly payment on an amortising loan is P × r ÷ (1 − (1+r)^−n), where r is the monthly rate and n the number of payments. Twenty thousand at 8.5% over 60 months is 410.33 a month, and 4,620 of interest in total.
How to work out a monthly payment
Lengthening the term is the standard way to make a payment affordable and the standard way to pay far more overall. Going from 48 to 72 months on the same 20,000 loan cuts the monthly payment by about a third and increases total interest by roughly half. Lenders lead with the monthly figure precisely because it is the number that feels affordable, which is why the total-paid row deserves at least as much attention before signing.
Questions
P × r ÷ (1 − (1+r)^−n), with r the monthly rate and n the number of months.
Yes, substantially. The payment falls but total interest rises, often by half again over an extra two years.
Not always. Representative rates only need to be offered to 51% of successful applicants; your rate may be higher.
APR includes compulsory fees as well as interest, so it is the fairer number for comparing offers.
Usually, but check for early-repayment charges; some loans levy up to two months of interest.